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LVMH-backed Asia private equity fund sued in Singapore by fired executive

Tuesday, June 21, 2016 - 15:09

[SINGAPORE] An Asian private equity unit backed by LVMH Moet Hennessy Louis Vuitton SE is being sued by a former executive, who is claiming he was fired for revealing wrongdoing at the business.

Uday Mehra said in Singapore court documents that he had raised his concerns over alleged behavior at LVMH's regional private equity fund, L Capital Asia Advisors, such as raising profit projections for an investment target to generate illegitimate gains in a separate fund.

Mr Mehra also alleges that L Capital's head made an acquisition despite opposition from his investment team and without proper due diligence. Mr Mehra claims that the firm conspired to fire him in a bid to "stifle the embarrassment" that would have been caused by a full and effective probe into his whistle-blowing.

L Capital, which denies Mr Mehra's claims, makes average investments of US$30 million to US$150 million in Asian lifestyle brands and has had other business quarrels play out in court, filings show.

The co-founder of Jones the Grocer, a gourmet food retailer, sued an L Capital unit last year, claiming it discriminated against minorities. Last month, a businessman accused the fund and others of stealing his share of profits after selling a club formerly known as Ku De Ta, the 57th-floor bar at the top of Singapore's Marina Bay Sands hotel. L Capital is defending itself in both the lawsuits, which are ongoing.

Mr Mehra is seeking at least US$37.5 million, which he claims is his entitled payout for the share of profits he would have earned at one of the funds if he hadn't been terminated, according to a lawsuit filed in the Singapore High Court in March.

Mr Mehra, who said in court filings that he was described in fundraising documents as a "key resource" and as the fund's "X-factor," says he reported 11 deals from 2012 to 2014 that gave him serious cause for concern.

Mr Mehra claims his concerns were ignored. Instead, he said he was sidelined from investment meetings and his working relationship with the unit's head, Ravi Thakran, worsened.

Reasons given for his firing, including not attending meetings in Singapore, were "excuses" and he was being punished for whistle-blowing, Mr Mehra said in court papers.

"I felt extremely shocked and aggrieved as to the manner in which I was treated within L Capital Asia whilst attempting to uphold the interest of our investors and dispense my duties in a professional manner," Mr Mehra said through his lawyers at RHTLaw Taylor Wessing LLP.

L Capital denied wrongdoing and said in its defense filed last month that it fired Mr Mehra in June 2015 for misconduct and insubordination. The firm said that Mr Mehra's complaint was frivolous and that his concerns were independently reviewed and probed by LVMH.

Mr Mehra's alleged whistle-blowing was a red herring and had nothing to do with his termination, L Capital said. The firm said Mr Mehra failed to subscribe for his share of a profit pool and wasn't entitled to it, according to court papers.

"L Capital takes a serious view of the allegations made by this former employee, whose employment was terminated in 2015. Our clients consider these allegations to be baseless, and intend to vigorously resist his claim in the Singapore Courts to the fullest extent," said lawyer Alvin Yeo at WongPartnership LLP, who said he represented both L Capital and Mr Thakran.

Mr Mehra was fired for alleged breach of contract, trust and confidence, L Capital said in court documents. The executive misused confidential information and forwarded e-mails to his personal account, according to court papers.

"The L Capital Asia Group and the LVMH Group takes a serious view on governance issues," according to the defense. "No wrongdoing was disclosed."

The case is Uday Mehra v L Capital Asia Advisors, S242/2016. Singapore High Court.

BLOOMBERG